Overview
The VAT regime for electronically supplied services (ESS), was approved by Law 4/X/2021 (2022 State Budget) and came into force on 1 January 2022.
The regime was republished in 2024 through Law 41/X/2024, which approves the Legal Framework for Digital Services and Electronic Commerce, published on 12 August 2024.
This regime applies to the international e-commerce operations carried out in Cape Verde by taxpayers included in the list of large e-commerce players to be prepared by the Ministry of Finance based on data provided by financial institutions.
This regime applies to international e-commerce operations, as defined below (see “Services in Scope”), whenever the consumer has their head office, permanent establishment or domicile in national territory or whenever the payment originates in Cape Verde or is intermediated by a financial institution established therein.
E-commerce operators to be listed therein, are obliged to complete a simplified registration through the electronic page. In this regard, there are two different regimes applicable within the ESS regime:
- General regime: Applicable to the taxable persons that proceed with the simplified registration
- Subsidiary regime: Applicable to the taxable persons that do not complete the registration
VAT is due the moment the payment for the supply is authorised by the financial institution, at the VAT rate applicable (reduced or standard rate), if the taxable person is in the general regime, or only at the standard rate of 15% if the taxable person is in the subsidiary regime. Nevertheless, currently, there is only a single rate of 15% foreseen in the VAT legislation.
Key provisions applicable to VAT on ESS
| Particulars | Description |
| Scope | The regime applies to all taxable persons identified on the list of main e-commerce operators and does not distinguish between the electronic supply of services provided to individuals (“B2C”) or businesses (“B2B”). |
| Liability to remit VAT | By the supplier of the electronic service |
| Standard VAT rate | 15% |
| Taxable value | Price payable by the recipient of the supply |
| Effective date | 1 January 2022 |
| VAT registration threshold | Not applicable |
| Tax invoice | Non-resident suppliers under the ESS regime are required to issue electronic tax invoices. |
Services in scope
For purposes of applying to the ESS regime, the following operations constitute e-commerce supplies, as long as it is carried out via an electronic platform, portal, or similar interface:
The provision of services, for providers that are not established, do not have a fixed establishment, nor a permanent address in Cape Verde.
The regime is only applicable to remittances with a value of up to 10,000 CVE (circa USD 100).
Registration and compliance
Registration requirements under the ESS regime are only applicable to designated main e-commerce operators, regardless of whether its supplies are made under a B2B or B2C arrangement.
In this regard, financial institutions must provide the Tax Authorities with data on the highest value payments made to suppliers of electronic services, which will be then compiled into a list of entities to which simplified registration is mandatory.
Provided that a non-resident supplier is included in this list, it is required to complete the registration by the end of June.
Once registered for VAT under the ESS regime, non-resident companies are required to submit quarterly VAT returns. The corresponding VAT payments must be made by the end of the month following the end of the VAT return period (quarter).
Invoicing
Non-resident suppliers providing electronically supplied services are required to issue invoices in accordance with VAT legislation requirements.
Please note that, starting on 1 January 2024, the concept of “invoices issued in legal form” granting the right to deduct input VAT, has been updated covering only invoices issued electronically.
Moreover, whilst it is acceptable for non-resident suppliers to invoice customers/recipients in a foreign currency, the invoice should always contain an explicit reference to the Cape Verdean VAT, regardless of the currency in which it is denominated.
In addition to the invoice, remittances should contain the identification of the recipient on its outer side and the VAT number attributed to the non-resident supplier under the ESS regime.
VAT on costs
The Special VAT regime for e-commerce does not addresses VAT recovery on incurred costs. Thus, the general regime foreseen in the VAT Code applies, and input VAT incurred in Cape Verde may be recovered on the quarterly VAT returns.
Other considerations
Whilst the ESS regime is legally enforced, it has yet to materialise in practice as the main e-commerce operators list has not been published by the relevant government office.
VAT on cryptocurrency/digital assets
Although cryptocurrency related activities are legally recognised and regulated in Cape Verde, the VAT legislation does not contain any specific provisions on cryptocurrency.
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